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Why China is important to SA

Thursday, December 11, 2014

By Minister in the Presidency Jeff Radebe

It took many by surprise when China became Africa's largest trading partner in 2009, surpassing the United States.

Since then, China’s growing presence in Africa has become a subject of discussion, especially among the foreign press. Everyone, from analysts to politicians and ordinary people on the street, suddenly had a view on the Chinese.

China’s rapid rise as an influential player in Africa has led many to question the nature of its involvement on the continent. Many questioned the intentions of the Chinese while some even went as far as ridiculing products offered to Africans by China as “fong kong”. Some became suspicious when the Chinese started to build roads, dams, stadiums and hotels in Africa. They asked: What does China want in return? Of course, as it invests in Africa, China is taking advantage of the continent’s rich natural resources to meet the growing needs of its people.

By last year, China recorded nearly R2.2 trillion in trade flows in Africa, making it clear that they want to become the most influential foreign power in Africa. China's total trade with South Africa increased from about R190 billion to R270 billion last year and is rapidly approaching R300 billion.

It is for this reason that President Jacob Zuma’s recent visit to China was viewed with keen interest. The State visit to China by our President reinforce the close ties shared between China and South Africa and highlighted the depth of our relations, not only in the political realm of BRICS – the group of five major emerging national economies: Brazil, Russia, India, China, and South Africa - but also in business, agriculture, tourism, cultural exchanges, academic co-operation and scientific research.

South Africa doesn’t see its relationship with China as just based on trade, but a partnership rather, that is aligned to our development goals. China, on the other hand, regards South Africa as a key partner in advancing its relations with the African.

This is seen in the context of investments the Chinese have made in South Africa over the past few years and the value such investments have had on our economy. Our relations with China have reached new heights, in the short space of 15 years. It’s hard to believe that bilateral trade volume was aboutR12 billion when the diplomatic relationship was first established.

In 2012, the figure reached nearly R660 billion, which means a 40-fold increase in the past 15 years. Subsequently, this made China South Africa's largest trading partner, largest export market and largest source of import for the past four years. South Africa is also China's largest trading partner in Africa. Between January 2003 and January this year, 38 foreign direct investment projects were recorded representing a total capital investment of R13.33 billion or an average investment of R350.5 million for each project from China. Chinese investments in South Africa have contributed to job creation. During the period, a total of 10,992 jobs were created.

This year, the Chinese went a step further in investing in our economy when car manufacturer First Automobile Works (FAW) invested R1.1 billion to build a vehicle assembly plant in Coega, in the Eastern Cape, which is expected produce up to 35,000 passenger vehicles in the coming years. Last year, technology producer Hisense opened a factory in Atlantis, north of Cape Town, employing 300 South Africans in the production of goods for export to the broader African market. Cement producer Jidong Development Group and the China-Africa Development (CAD) Fund recently agreed to establish a R1.8 billion cement plant in Limpopo, with a projected production rate of 1 million tons of cement at full production.

As we review the status of our bilateral relations with the People’s Republic of China, we aim to ensure that the excellent growth path that we have already defined is strengthened with our focus on the priority issues of development in South Africa and Africa.

South Africa and China are positioning our nations as countries that are open for business. This is crucial to ensuring that we deliver on our domestic imperatives which include, amongst others thing, economic growth and development, job creation and an overall improvement in the lives of our people.

We will recall that during President Xi Jinping’s state visit to South Africa earlier this year, the two governments agreed to designate this year as the “Year of South Africa” in China, and next year as the “Year of China” in South Africa. The “Year of South Africa in China” coincides with South Africa’s celebration of 20 years of Freedom.

The aim of the “Year of South Africa” in China this year is to profile South Africa’s economic, political and cultural achievements since the end of apartheid. The year will also seek to explore more business and developmental opportunities, and demonstrate South Africa’s innovations, and best practices in various areas such as science and technology, fashion, mining, arts, culture, tourism and greater people- to- people interaction.

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